At Work

What’s the Purpose of Business? HINT: It’s Not Maximizing Shareholder Value

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But remember the LORD your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant, which he swore to your ancestors, as it is today (Deut. 8:18).

In a New York Times article in September, 1970, Milton Friedman emphatically stated that the purpose of business is to maximize shareholder value. This position was picked up by business leaders and the media and has been so often repeated that it has become an established corporate mantra, driving the behavior of many of today’s businesses.

Yet, we as Christians need to reject this self-centered purpose for businesses because God designed businesses for a higher purpose.

God’s Plan: Business Should Be about Mutual Flourishing

In an essay entitled “The Purpose and Practice of Business,” Tim Weinhold writes:

God’s purpose for business (and everything else) is that it foster human flourishing— that it make people’s lives better. In practice, business does so when it fulfills ‘Love your neighbor’ by creating real value for customers, employees, and others. Taken together, these are the essentials of ‘business for blessing’—God’s grand intent for the purpose and practice of business.

We see clearly in the opening chapters of Genesis (1:28, 2:15) that work, and by extension business, was intended to bring flourishing to God’s creation.

The Old Testament prophet Jeremiah writes to the exiles in Babylon, relaying God’s message to them:

…work for the peace and prosperity of the city where I sent you into exile. Pray to the Lord for it, for its welfare will determine your welfare (Jer. 29:7).

Here we find one of the sustainable principles for all business: take care of your clients and they will take care of you. This principle always works. Why? Because it is a principle that God wove into the very fabric of his creation. It is like gravity, it works whether we believe it or not.

Again, Tim Weinhold’s observations are very helpful in sorting this out:

Business loves its neighbors by creating value for them. When business does so, when it creates substantial value for customers (and others) by serving them well, it reaps blessing. Both people and business flourish. Of course, business can do the opposite, it can serve itself at the expense of customers (and other neighbors). In which case, rather than creating value, business extracts value. Scripture refers to this dynamic—to taking value from those to whom it belongs—as ‘stealing’ and ‘plunder’ and says it brings death to all involved (see Proverbs 1:10-19).

Fortunately, there are still businesses that have not sold out to Friedman’s misguided directive.

The Publix Story of Flourishing

When I was young, I would love to go visit my grandmother in a little Florida town called Winter Haven. I especially enjoyed going to her favorite grocery store (probably because the bakery always gave us a free cookie). I remember her telling me she knew the owner when he was a stock boy at the Piggly Wiggly in the 1920s. The owner’s name was George Jenkins and his store was called Publix.

In 2016, Publix’s over 1,100 stores were run by Jenkins’s grandson, Ed Crenshaw. Publix ranks number eight on the 2016 list of the country’s largest private companies and number 87 on the 2016 Fortune 500 with 2015 annual revenues of $32.6 billion. Forbes has reported that Publix is the country’s most profitable grocery chain with net margins of 5.6 percent (Whole Foods, by contrast, is at 3.9 percent).

But probably even more important to the founder, Publix has ranked number one out of grocery chains on the American Consumer Satisfaction Index since the index began until 2015 when it landed in second place behind Trader Joe’s and Wegmans, which tied for first place.

This success was not achieved because Jenkins’s number one priority was to maximize shareholders’ value. Its success is derived from the owner’s desire to serve the people around him and see them flourish.

In the 1950s, Publix began selling stock to its employees, and in 1974 Publix established a company-funded employee stock ownership plan. Today their employees own approximately 80 percent of the company—worth more than $17 billion. Publix also has a substantial bonus program, but most impressively, according to Fortune, Publix has never laid off a single employee.

From the very beginning, the company was founded on a set of core values—many of which echo biblical truths. Here are just three of the seven values that Jenkins taught his employees:

  • Do the Right Thing—Never let making a profit stand in the way of doing the right thing.
  • Invest in Others—Jenkins apparently said, “One of the most important lessons I’ve learned in my business career is that no man put together an organization on his own.”
  • Giving is the Only Way to Get—Never forget anyone who helped you along the way to business success.

The success of Publix is because they put others first—customers and employees—and see their business as vehicle to bring about mutual flourishing.

Applying the Example of Publix

So, how can we as individual believers make any difference in this area?

  1. We can seek out and support businesses that are truly trying to bring flourishing to their communities. In this way we can, in a sense, be salt and light with our wallets.
  2. Encourage others to do the same.
  3. We can be a positive influence in the business in which we work by demonstrating these principles in the way we do our work. This can be a great witness, even to those we work for.

Work was given to us by God as a tool to bring about flourishing for his creation. We all need to act purposefully to see that it is used for this end.

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